GETTING THE CREDIT YOU DESERVE: Worker’s Compensation Credits and Offsets

Handling claims can be exhausting. As a day-to-day endeavor, it can leave claims professionals running from one fire to the next, one deadline to the next, one day to the next. Generally, that does not produce the sort of inspired work claims professionals want to do. Of course, not putting out fires has its own negative consequences. Today we will talk about one small corner of the worker’s compensation claims professional’s world that can produce big results with little time: credits and offsets.

CREDITS AND OFFSETS AS A LOSS CONTROL TOOL

Louisiana workers’ compensation claims are tightly managed and controlled under the laws and rules in the workers’ compensation system. Unlike with liability claims, exposure is evaluated with mathematical certainty based on the likely contingencies presented by the facts of each case. However, there are several sometimes-overlooked tools available to claims professionals to reduce, terminate, or shift worker’s compensation exposure. Experienced claims professionals know these statutory aides to loss control, but a claims professional’s time is often necessarily occupied by the details of medical bills, vendor bills, calls from the claimant or the claimant’s attorney, and the reporting demands of the insurer, the insured, or an immediate supervisor. Worker’s compensation claims move quickly, so claims professionals simply have less time to focus on how they apply to the nuances of the workers’ compensation statute to the facts before them and how those facts might be used to control exposure. To help, here is a quick list of common credits available under the Louisiana worker’s compensation statute to help you reduce exposure.

SOCIAL SECURITY DISABILITY REVERSE OFFSET

In 1995, the Louisiana Supreme Court, in Garrett v. Seventh Ward General Hospital, said an employer could take an offset against the employee’s receipt of Social Security disability benefits without making an admission that the employee was permanently disabled. That lasted four short years until 1999 when in Al Johnson Construction Company and LIGA v. Pitre, the Court concluded that their decision in Garrett was in error. According to the Court, their earlier opinion was motivated by a desire to avoid double recovery by the employee of both Social Security and workers’ compensation. In Pitre, the Court said it was not concerned about double recovery because of the offset that can be taken by Social Security when the employee is receiving workers’ compensation benefits.

Although the Garrett offset under section 1225(C) is no longer available, the Louisiana Reverse Offset under Section 1225(A) is still around. To claim the Louisiana Reverse Offset, the employee must be declared permanently and totally disabled. A demand for the Offset must be made through the Office of Worker’s Compensation. In cases where the employee’s right to benefits is being disputed in a pending claim, the employer must request the offset through its Answer to the LDOL-WC-1008 form or by making a request for the offset through the filing its own claim form. After the worker's compensation Judge has made a determination that the claimant is permanently disabled and the offset is appropriate, the Judge will request the necessary information from the Social Security Administration, calculate the offset, and issue an order on form LDOL-WC-1005(B) recognizing the entitlement to and the amount of the offset.

When an employer is paying benefits voluntarily, the offset may be requested on form LDOL-WC-1005(A) or by a letter to the district office. Upon receipt of such a request, the district office will request the necessary information from the Social Security Administration and shall calculate the amount of any offset. Unless you are certain that the claimant is permanently and totally disabled and that the offset will be worth admitting permanent and total disability status, we do not recommend making the request by letter. Instead, consider filing a Petition for Declaratory Judgment, which will give the employer an opportunity to dispute permanent disability status but still ask the court to determine whether the worker is permanently and totally disabled and, if such a determination is made, to grant the offset.

UNEMPLOYMENT COMPENSATION

Often forgotten is the employer’s credit for any week the employee received unemployment compensation benefits during the period that a worker’s compensation claim is also being made. If the claimant is receiving unemployment benefits, no indemnity benefits are payable when the employee is qualified to receive TTD, permanent and total disability benefits, or SEB. However, if an employee is receiving permanent partial disability benefits, he may then also receive unemployment benefits. The credit is applied week-to-week, meaning that for any week the claimant receives the unemployment benefit, he is disqualified from receiving worker’s compensation benefits as described above.

OLD AGE RETIREMENT CREDIT

A claimant receiving Social Security old-age retirement benefits is subject to a reduction of worker’s compensation benefits. Supplemental Earnings Benefits payments could also be terminated after 104 weeks. To the extent that employee has not funded old-age retirement benefits and is receiving these benefits, the employer can reduce based on benefits funded by a different employer.

MEDICAL EXPENSE OFFSET

Medical debt is extinguished if it is paid by another party, such as health insurance, etc. This does not include Medicare, which always seeks to be a secondary payor. Another exception to this rule is if direct payment is made by the employee, the employee’s spouse, relative, or friend. Also, if the employee or his spouse pays a percentage of his health insurance premium, then the offset only applies to the percentage paid by the employer.

VOLUNTARY PAYMENTS

Unearned wages, voluntary payments, or overpayments paid by the employer or its insurer, which are not owed when they are made may be deducted from the payments to be made as compensation. This is true even if the payment is due to an employer’s mistake. When the employer attempts to recover this credit, a judge may order a reduction of benefits instead of the complete suspension of benefits.

FORFEITURE OF BENEFITS WHILE INCARCERATED

An employee’s right to compensation benefits and medical expenses is forfeited during any period of incarceration. One exception to this is when a workers’ compensation judge finds that an employee has dependents who rely on a compensation award for their support. In that case, the compensation indemnity payments may be paid to the legal guardian of the minor dependent or another person designated by the court. Each payment made to a dependent is considered as having been made to the employee.

Keeping an eye out for potential credits or offsets can be challenging, especially with all of the other things claims professionals must track.  Difficult doesn’t mean less important though. Consistently finding and capturing these available credits is another way you can stand above your peers.           

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Lance E. Harwell is a Member of Staines & Eppling, LLC practicing, publishing, and presenting seminars in the fields of general liability, insurance coverage, bad faith insurance claims handling, auto liability, longshore, Louisiana worker’s compensation, fire, and property defense. He is an AV-rated attorney, a Melvin Jones Fellow, and a recipient of the APAS Frank Hara Memorial Award for community service. Lance was selected and serves on the Louisiana Association of Business & Industry’s (LABI) Legal Advisory Council.  When he is not practicing law, Lance often volunteers with the Louisiana Bar Association’ Law Day and Constitution Day events, Project H.E.L.P. (Homeless Experience Legal Protection), the University Park Lions Club, and the Asian-Pacific American Society. Otherwise, he can be found cheering for his Louisiana Ragin’ Cajuns. He is married to a woman he does not deserve and is the father of one really great son.

The opinions and comments expressed above are those of Lance E. Harwell, who is not responsible for the inaccuracy of content or any loss or damages incurred by any party as a result of reliance on information contained in this article. The article may not be published or reproduced without the written consent of the author. Prior articles may not be updated for accuracy as pertinent information changes over time. The content of this and other articles composed by Lance E. Harwell provide general information not specific to any particular case or set of facts and should not be construed as legal advice, nor do they establish an attorney-client relationship.